investor presentation...non-gaap financial measures as tools for comparison. the company has...
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Investor Presentation
June 2020
Safe Harbor This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to future results of operations and financial position, planned products and services, business strategy and plans, objectives of management for future operations of PagerDuty, Inc. (“PagerDuty” or the “Company”), market size and growth opportunities, competitive position and technological and market trends, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall” or the negative of these terms or other similar words. You should not rely upon-forward looking statements as predictions of future events. The outcome of events described in these forward-looking statements contained in this presentation is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause PagerDuty’s actual results, performance or outcomes to could cause results to differ materially from those expressed or implied by such forward-looking statements, including: the effect of uncertainties related to the COVID-19 pandemic on U.S. and global markets, our business, operations, revenue results, cash flow, operating expenses, demand for our solutions, sales cycles, customer retention and our customers’ businesses; our ability to achieve and maintain future profitability; our ability to attract new customers and retain and sell additional functionality and services to our existing customers; our ability to sustain and manage our growth; our dependence on revenue from a single product; our ability to compete effectively in an increasingly competitive market; and general market, political, economic, and business conditions. The forward-looking statements contained in this presentation are also subject to additional risks, uncertainties, and factors, including those more fully described in PagerDuty’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K.
Forward-looking statements represent PagerDuty’s management’s beliefs and assumptions only as of the date such statements are made. PagerDuty undertakes no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, except as required by law.
This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to market size and growth and other industry data. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. The Company has not independently verified the statistical and other industry data generated by independent parties and contained in this presentation and, accordingly, it cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of its future performance and the future performance of the markets in which the Company competes are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results or outcomes to differ materially from those expressed in the estimates made by the independent parties and by PagerDuty. This presentation also includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of the Company’s non-GAAP financial measures as tools for comparison. The Company has provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the appendix. For further information with respect to PagerDuty, we refer you to our most recent Annual Report on Form 10-K filed with the SEC. In addition, we are subject to the information and reporting requirements of the Securities Exchange Act of 1934 and, accordingly, file periodic reports, current reports, proxy statements and other information with the SEC. These periodic reports, current reports, proxy statements and other information are available for review at the SEC’s website at http://www.sec.gov.
Q1 FY 2021 Update
Proprietary & Confidential
A Global Leader in Digital Operations Management
Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/20
$31$34
$37$40
$43$46
$50
13,0601
Customers500K+1
Users11 years+1
Data~60%1
Fortune 100
Notes: 1. As of 4/30/2020.
COVID-19 Impact on Specific Verticals
Notes: 1. Includes companies that had at least one incident between January 1 and March 14, and at least one incident after March 14.
2. Source: PagerDuty.
Despite Load, PD Customers Resolving Incidents Faster
Most Stressed Verticals: Digital Stress vs. Time to Resolve3/15/20 - 5/09/20
Notes: 1. Source: PagerDuty.
Headwinds
Tailwinds● Digital transformation is now accelerated
● PagerDuty provides automation
● On average, companies are seeing
2X the number of incidents1
● PagerDuty delivers a 731% ROI2
● Some Enterprise customers are pausing
on expansion deals
● Small businesses under financial strain
● Uncertainty whether sales cycles may
lengthen
Notes: 1.Compares the period from January 1, 2020 to March 14, 2020 to March 14, 2020 to May 5, 2020.
2. Source: IDC Business Value Research, sponsored by PagerDuty, “PagerDuty Helps Organizations Optimize Their Digital Operations Management to Create Better Value,” September 2019.
Proprietary & Confidential
Company Presentation
What Is Happening in Business Today?
Digital Transformation
DevOps Culture
Siloed Teams
Customer Experience Is Paramount
Increased Remote Work
Shift to Cloud
Source: IDC Business Value Research, sponsored by PagerDuty, “PagerDuty Helps Organizations Optimize Their Digital Operations Management to Create Better Value,” September 2019.
Queued
Siloed
Manual
Reactive
Static
Rules-based
Real-time
Collaborative
Automated
Proactive
Learning
Intelligent
32.4Avg. Incidents /
Month Per Person
2.25Avg. Hours Required
to Troubleshoot
$53Per Hour Cost(assumption)
10User Team
(assumption)
($465,319)Annual Incident Response Cost for a team of 10
12%Reduction in
Incidents
73%Avg. Reduced Time
to Troubleshoot
$356,553Savings per year for a team of 10
731%ROI over 3 year term, with 4 month payback
Before PagerDuty After PagerDuty
PagerDuty’s Unique Approach: Empowering teams to take the right action in real time
Automation | AnalyticsOrchestration | Visibility
Machine learning
Machinedata
HumanResponsedata
PagerDuty Platform for Real-Time Operations
US
EC
AS
ESA
DD
-ON
P
RO
DU
CTS
DevOps ITOps HybridOps SecOps Support BusinessOps IndustrialOps
AnalyticsEmpower data-driven results.
Event IntelligenceReduce noise and optimize context.
VisibilityAlign business and technical impact.
Modern Incident ResponseAutomate action.
On-Call ManagementDrive accountability. Accelerate resolution.
Enterprise ClassCloud-native, built for real-time work.
Unique Dataset350+ Integrations | People | Services | Metrics
PLA
TFO
RM
Harness Digital Data
Make Sense of Data
PagerDuty’s machine learning algorithms automatically:
Make Sense of Data
● Reduce noise
● Create context &recommendations
● Accelerate learning from past incidents
● Optimizes real-time digital operations
PagerDuty’s flexible organization of services prepares you to operate a major incident in real-time, every time.
● Preparedness
● Full visibility into apps /
services
● Understand key information
● Who’s on call
● Reports incidents on services
● Enables efficient response
PagerDuty allows a stakeholder to manage all these things in one place
Proactively Manage Your Real-time Operations
Use PagerDuty’s unique combination of human and machine data to enhance your team’s performance by preventing and accelerating resolution of future incidents.
Prescriptive analytics, industry benchmarks and insights into team health improve operational maturity over time.
Analyze & Learn
Reactive● Issues surfaced
by customers
● No defined process for managing issues
● Knowledge and capabilities in silos
● Issues auto-identified
● Process for getting the right person on the problem immediately
● Ad hoc knowledge sharing
Responsive● Relevant, timely delivery
of information
● Automated cross-team response and action
● Programmatic learning
Proactive ● Predictive remediation based on machine learning insights
● Consistent, pervasive best practices across the organization
● Highly automated processes eliminate toil
● Continuous learning, improvement, and prevention
Preventative
PagerDuty’s Digital Operations Maturity Model
Why PagerDuty Wins?
Value add services built on our data set
Secure, Resilient & Scalable
Designed for all users
Automating signal to action
Built for Real Time
~10 years of machine, human data
350+ Integrations
Breadth of functionality
Why PagerDuty?
Market Innovation & Leadership
Real-time Business Visibility & Insights
Enterprise Class
Modern, Team-centered
Data Model
Event Intelligence & Automated Response
Operations Health Visibility
Ease of Use & Adoption
Comprehensive Technology Ecosystem
● Real Time Visibility
● Ticketing
● Response Orchestration
● Platform integrations
● Real Time Collaboration Tools
Incident Management
Digital Operations Management
$100B
$25B
● Benchmarking
● Real Time Workflow Automation
● Event Intelligence (AIOps)
● Predictive Analytics
On-Call Automation
● Triage + Prioritization
● Alerting
● Scheduling
Digital Operations Management: a $100B Category
Note: Represents the product of [the sum of our published per user sales prices for all of our products] multiplied by our estimate of the total number of potential users of our products.
Customer Segment (By $ Revenue)
Enterprise >$1B
Mid-Market >$50M
SMB <$50M
High Value
Field Sales
High Velocity
Inside Sales
Sales Channel
Efficient Velocity Go-to-Market Model Aligns to Customer Opportunity
Digital
Sales +High Velocity
Inside Sales
Sel
f-se
rvic
e
Proprietary & Confidential
PagerDuty is uniquely positioned to solve the complex problems of the world’s largest companies.
Win in enterprise and mid-market
When companies face mission-critical issues they need a real-time solution that orchestrates teams, and data in a coordinated, automated way
Become the platform for real-time work
Expanding beyond DevOps and IT is also important because real-time work isn’t limited to just DevOps and IT.
Expand our reach beyond DevOps and IT
Key Growth Drivers
Proprietary & Confidential
Financial Discussion
Financial Highlights
3. Dollar-based net retention rate compares ARR from the same set of customers across comparable periods.
Notes: 4. Refer to 10-Q for detailed definition.
5. Non-GAAP: Unburdened by SSC. Refer to appendix for reconciliation to GAAP.
1. Last 12 months ended April 30, 2020.
2. Period ended April 30, 2020.
37%$179MM $25Bn+ 121%Scale High Growth Potential Sticky
13,000+ Scale
348Enterprise
~99%Predictable Efficient
TTM Revenue ¹ Revenue Growth ¹ Total Addressable Market Dollar-Based Net Retention Rate ²-⁴
87%5
Customers 2 Subscription Revenue 2 Non-GAAP Gross Margin 2Customers 2
99% of Revenue from Subscriptions
>95% Renewal Rate
Growth while maintaining cash flow
Revenue Growth
348 Customers over $100K in ARR1
Accelerating growth in enterprise
57 Customers over $500K in ARR1
Customer Growth Metrics
1. As of April 30, 2020.
Non-GAAP Gross Margins1
26
Cloud native architecture
DevOps approach to production
Programmatic approach to
customer success
1. Refer to the Appendix for GAAP to Non-GAAP reconciliation.
Non-GAAP Operating Expenses as a % of Revenue1
1. Refer to the Appendix for GAAP to Non-GAAP reconciliation.
Non-GAAP Net Loss, Operating Loss and EPS1
Non-GAAP Operating Loss
Non-GAAP Operating Margin
Non-GAAP Net Loss
Non-GAAP EPS
1Q 2021
$ (4) Million
(9%)
$(3) Million
$(0.04)
1Q 2020
$(8) Million
(21%)
$(7) Million
$(0.22)
1. Refer to the Appendix for GAAP to Non-GAAP reconciliation.
Guidance
Revenue
Non-GAAP Net Loss per Share
Shares
2Q 2021
$50 - 51 Million
$(0.06) - $(0.07)
79 Million
FY 2021
$204 - 213 Million
($(0.25) - $(0.30)
79 Million
Appendix
GAAP to Non-GAAP Reconciliation
31
GAAP to Non-GAAP Reconciliation (Cont.)
32